Evaluating your business design
Solving a business design gap is done in two steps, the first is identifying which part of the business model is under-performing, and the second is adjusting this part and bringing it up to par. Once this is complete, your business model should be able to be leverage for your innovation attempts. If you have not yet projected your current business model into the canvas business model, please do so using the framework here: Analyze your product with the 5 'S' *'Sexiness '''corresponds to the attractiveness of your product, service, business model and the capacity of the innovation to fill the needs of customers and investors. *'Simplicity''' refers to the complexity of your product, service or business model which must be as simple as possible. The more a product is complex; less customers will understand it and leverage the innovation. *'Synergy' is about the number of synergy’s levels between your innovation in one hand and resource allocation, distribution channels, possible partners, market trends… *'Scalability' refers to growth and speed growth potential for your innovation. This growth depends on the market size first but then on scalability of the product, of the service, of the business model. *'Sustainability '''corresponds to the long term aspects of the innovation, it has to represent a potential for the long term. From the 5 S’s above, the 2 most important ones for the customer are sexiness and simplicity. We find these 2 strategically important because they define the success of a product innovation since they make up a significant part of the customer value , therefore - instead of relying on the company’s subjective assessment on how sexy and simple the product is for the customer - we suggest to let the customer himself evaluate these characteristics. It is recommendable to conduct a market research to find out whether or not your customers find your product sexy and simple. The following two questions should be asked to the customer: *How attractive is the product for you in terms of beauty and usefulness? *In comparison to similar products, how do you value the simplicity of the product? The customer should then rate sexiness and simplicity on a scale of 1 to 5, with 1 being not sexy and 5 being very sexy. The graph below will give an interpretation on how to evaluate the average rating of the customer. *'GREEN LIGHT': Very good rating, the product does not lack sexiness or simplicity in the customer’s view. *'ORANGE LIGHT': Medium rating, the product’s sexyness and simplicity should improve in the customer’s view *'RED LIGHT': Bad or ambivalent rating, the customer has either given your product bad marks for both - sexiness and simplicity - or for only one of these 2, concluding either both or only one need to be improved rapidly to be valuable to the customer on a sustainable basis. After an appropriate evaluation of sexiness, simplicity, synergy, scalability and sustainability, we will now proceed with the second and last step of evaluating your company's business model. In this step we will link the 5’s model used above with the business canvas model, assuming that each of the S’s is expressed and hence can be influenced in various parts of the business canvas model. In other words, certain parts of the business model and how these parts are designed define each of the 5’s we saw before. As now we have already evaluated in which of these S’s the company needs to improve (basically in all that are not being rated 4 or 5) from the table below you can extract which parts of your business model need to be revised accordingly. Make adjustments Studying how we could match the 5 ‘S’ model with the canvas model, we realized that the value proposition is in every point of the 5 ‘S’. For the Sexiness, obviously, without a good value proposition, the innovation cannot be attractive for customers. For the simplicity, it has to be in the value proposition too to be interesting for customers. As for the synergy, it has to be in phase with the value proposition or you will lose you customers. To summarize, you know now from your evaluation of 5 S’s which parts of the business canvas model to revise. Finally this part is about not giving you misleading orders on what to do concerning each part of the business model your company may need to revise and adjust - since there will never be a step-to-step instruction based on your specific business design gap. Instead we have collected help- and meaningful reading recommendations concerning each of the 9 elements in the canvas model that should at the end help your company in resolving the respective problems in each part. *'Key activities''' The article “Business Model Design: An Activity System Perspective” written by Christoph Zott and Raphael Amit analyze a company’s activity system - a set of interdependent organizational activities - on it’s value creation. See more *'Key partners' The following website suggests a model named “Partnership Proposition Canvas” that inspects and concludes ways to leverage key partners to the maximum. It examines the importance of a working exchange relationship between both partners and the flow of value between them using a structure similar to the canvas model. See more *'Key resources' This an interesting article that give example of resources a firm can use of resource based view which evaluate either your resource are unique, rare, non-substituable and valuable to your specific company. See more *'Cost structure' The report issued by KPMG’s advisory unit with the title “Rethink cost structures - Creating a sustainable cost advantage” aims at rethinking the business model and thereby creating costs advantages. See more *'Value proposition' In the article “Customer Value Proposition in Business Markets” issued by Havard Business Review analyze 3 basic kinds of value propositions and the points of indifference. See more *'Customer Relationship' We have here an interesting article about how we can relate the brand to customer realtionship. This trend takes more and more space in the customer realtionship. The article also talks about how you can evaluate the effectiveness of your brand towards its customers.See more *'Customer Segment' This is a quick guide of how to segment customers, follow the steps in order to verify if you chose the good customer segment. See more *'Channels' This article is a good first points about the multi-channels, a principle that is developing, and should be looked at. It is about the role of Internet in our distribution channels nowadays. See more *'Revenue streams' This article is a mini case study on how it could be done to change your revenue streams with the example of the health care system. This example can be used to remind how think outside can be done. See more